Xiaomi's New SU7 Price Strategy Explained: Why the Generation Upgrade Justifies the Cost

During a recent product update livestream, Xiaomi Auto leadership addressed one of the most pressing questions from consumers—why the next-generation SU7 commands a higher price. The company revealed that Standard and Pro variants see a 14,000 yuan increase, while the Max model carries a 10,000 yuan premium compared to the previous generation.

The Real Cost Behind the Numbers

Lei Jun, Xiaomi Group Chairman, didn’t shy away from the market scrutiny. Rather than dismissing concerns, he laid out the specifics: this price increase reflects tangible hardware enhancements across the board. Both entry-level and mid-range models now feature an 800V silicon carbide high-voltage platform—traditionally a Max-tier exclusive. Lidar sensors come standard on all trim levels, and comprehensive autonomous driving hardware is fully integrated throughout the lineup.

The company estimates these core upgrades alone account for tens of thousands of yuan in added value. In traditional automotive terms, it’s comparable to a complete overhaul of the “three major components” in a gasoline vehicle.

Beyond product enhancement, supply chain realities play an equally significant role. Automotive-grade memory prices have surged 40-50% quarterly, with projections suggesting another 70% increase in subsequent quarters. Memory costs alone could balloon by several thousand yuan this year. When combined with rising commodity prices across the sector, manufacturers face unprecedented cost compression.

Why “More for the Same Price” Isn’t on the Table

Lei Jun directly addressed online speculation that Xiaomi would follow industry convention by offering the official price substantially lower than pre-sale pricing—or providing upgraded configurations at existing price points. He was unambiguous: that scenario is unlikely.

“With surging costs and tens of thousands in additional configuration, we truly cannot achieve ‘more for the same price’ anymore,” he stated. This candor reflects a different approach than typical automotive marketing, prioritizing transparency over aspirational messaging.

Design Continuity as a Deliberate Choice

Regarding the largely unchanged exterior appearance, designer Li Tianyuan explained the subtle updates: adjustments to the front grille’s black section, driven by the integration of 4D millimeter-wave radar now standard across models. The square radar unit occupies the center grille space, necessitating minor design refinements.

However, the decision to preserve the overall design language stems from deeper considerations. Internal research and external feedback consistently show strong attachment to the current aesthetic. More importantly, the company prioritizes value retention for existing owners. A dramatic design overhaul could destabilize resale values and create buyer regret—a concern Xiaomi takes seriously given the SU7’s strong residual value performance.

“Choosing not to change actually takes a lot of courage and confidence,” Lei Jun reflected. The design aims for timelessness rather than trend-chasing, a philosophy evident two years into the model’s lifecycle.

Interior Refinement and Material Story

Concerns about the black interior appearing dated were reframed through a different lens. Gray contrast stitching and quilting techniques break up the monochrome scheme, creating what the team describes as “steady yet lively” visual harmony. User research indicated persistent preference for black interiors among the target demographic.

The material finish and tactile quality received particular attention. The company conducted at least 16 formal meetings partly focused on cup design—a seemingly trivial detail that exemplifies the broader philosophy. Advanced mask-spraying processes create precise color transitions on the waistline, with manual logo application ensuring three-dimensional texture and premium feel. These obsessive refinements represent the brand’s commitment to material quality that differentiates from competitors.

The Three-Month Announcement Window

Releasing new model information nearly a quarter ahead of launch serves a strategic purpose. Purchasing a vehicle represents a major decision requiring deliberate consideration, not impulse behavior. The extended timeline allows potential buyers and existing owners to experience the updates, evaluate specifications, and align expectations—a gesture particularly important for a flagship model’s first generational update.

Brand Defense and User-First Positioning

The livestream also addressed recent controversy surrounding content creator collaborations. Lei Jun emphasized a clear institutional boundary: while the company welcomes criticism and maintains historical tolerance for detractors, it draws a firm line at creators who attack, belittle, or curse users and car owners.

“As a company, this is absolutely intolerable,” he stated. “Our bottom line is to firmly stand up for our users.” This user-centric stance emerged as a guiding principle across multiple responses, whether discussing pricing transparency, design preservation, or partnership standards.

The “Marketing Master” Misconception

Lei Jun also addressed the lingering “marketing master” label, tracing it back to a 2013-2014 entertainment show competition. The comment was inflated through repetition and weaponized by competitors to suggest Xiaomi’s success relies solely on marketing prowess rather than product merit.

“How could a single person sell that many phones?” he questioned. The characterization obscures the reality: SU7’s market success and sales leadership stem from genuine product strength, not promotional tactics alone. Distinguishing between effective brand communication and hollow marketing emerged as central to Xiaomi’s self-perception.

The company’s 16-year track record and willingness to engage in transparent dialogue with stakeholders form the foundation of trust that sustained growth. In Lei Jun’s assessment, truth eventually prevails when brought into open discussion—a conviction that shapes how the brand approaches both product development and public communication.